Cheap Rent Equates to Better Odds of Good Food

So one of my favorite economist books, not sure how many people can make a statement like that, is Discover Your Inner Economist: Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist.

I know, quite the title. The hidden gem of a chapter though is on finding food. There is a direct correlation between rent prices and food prices/quality. If a restaurant is in a mall or next to a big draw such as Target or Staples, the rent will be substantially higher. This is due to the increased interest in that particular piece of real estate. Now if a restaurant is in a small little strip mall or randomly situated in the middle of an industrial area, the rent should be cheaper. Now if we assume the cost for the individual ingredients remains constant you could get the same food sold at the same margin for less, in some cases substantially less. When you eat at a restaurant in a high rent area the cost is passed on to the consumer. Now if you find really good food at a high rent area the cost will have to be even higher. If they kept the prices low the demand will be too high. You see this all the time though which equates to a really long wait. If a restaurant has a very long line then it is inefficient and they would be better off raising prices to capture more business or expand to an additional location. Everything is inter related.

Bottom line: look for food in cheaper areas for a better chance of finding great food at a great price. Even if you don’t end up liking the food at least it will be bad food at a great price. High rent would equate to bad food at a bad price.